For the past few months i have been looking out for a bottoming out in PSU Banks as well as recommended the same. The technicals are very convincing but the relative choices of buying an all time high to a reversal is not that tough to make. Sticking to all time highs has given more peaceful returns.
But technically apart from making double bottoms or falling wedge reversals the current uptick has come with decent volumes in a lot of large PSU Banks. A good base has been built. So finally there is a structure where your stoplosses and entry points are defined.
Lets look at the PSU Bank Index first.
CNX PSU BANK INDEX TECHNICAL VIEW
- Classical Double Bottom.
- Strong Reversal above intermediate highs.
- Faster retracement signalling a trend change.
BANK OF BARODA TECHNICAL VIEW
- This has been the favorite in the segment given a classical falling wedge on lwo volumes.
- Good sideways consolidation around 150-155 before the last 3 days of uptick.
- Double/Triple bottoms at 138-142.
- A good base made at 150-160.
STATE BANK OF INDIA TECHNICAL VIEW
- The best chart on a trend basis as it did not break the last 1 year lows at 230-250 zone.
- Double/Triple Bottoms at 250-260.
- Can head higher to 330 and more.
- Base at 250-260.
UNION BANK OF INDIA TECHNICAL VIEW
- Higher bottoms made in last 3-4 months
- Major resistance zone of 180 crossed with volumes.
- Base built at 160.
CANARA BANK TECHNICAL VIEW
- Classical Falling Wedge Reversal with strong volumes uptick.
- Base built at 250-265.
- Although the trend is still down but can head to 400 or higher in medium term.
- The strategy should be to buy in parts with 30% at current levels and next 2 parts in dips of 5-10% from here or closer to base support zone.
- If you are already holding then can look to add on dips closer to breakout / base support zone.
- If there are better trending charts then you can give the sector a smaller allocation and not shift quickly.
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Securities covered above:: SBI , Bank of Baroda, Canara Bank, Union Bank of India
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August 5, 2015
Keep an eye on union bank of India. Has retraced 61 fib and forming inverted hammer.